Insights 
VT 
Key Points:
- Australian Dollar has recovered its daily losses amid hawkish RBA tone.
- Australia’s CPI eased to 3.4% YoY in November, below forecasts but still above the RBA’s target.
The Australian Dollar strengthened against the US Dollar on Wednesday, extending its rally for a fourth consecutive session. However, the AUD/USD pair came under pressure after Australia’s November Consumer Price Index data was released.
Australia’s Consumer Price Index rose 3.4% year on year in November, easing from 3.8% in October, data from the Australian Bureau of Statistics showed on Wednesday. The figure fell short of market expectations of 3.7% but remained above the Reserve Bank of Australia’s 2-3% per cent target. It marked the lowest inflation rate since August, with housing costs rising at their slowest pace in three months.
Australia’s Consumer Price Index was flat on a month-on-month basis in November, matching October’s reading. Meanwhile, the Reserve Bank of Australia’s trimmed mean CPI rose 0.3% on the month and 3.2% year on year. Separately, seasonally adjusted building approvals surged 15.2% in November to a near four-year high of 18,406 units, rebounding from a downwardly revised 6.1% decline previously. On an annual basis, approvals jumped 20.2%, reversing a revised 1.1% fall in October.
Technical Analysis
AUD/USD is trading around 0.6750 on Wednesday. Technical analysis of the daily chart shows the pair continuing to move higher within an ascending channel, signalling a sustained bullish bias.
The moving averages on the chart are aligning in favour of a bullish trend, with the widening gap between them signalling strengthening upward momentum. Prices may continue to move higher as long as the moving averages remain pointed to the upside.
The MACD indicator is also holding firmly above the 50 level, reinforcing the bullish trend, while the histogram continues to print strong positive bars. The next resistance for AUD/USD is seen near 0.6800, with a high likelihood of the pair testing this level unless there is a shift in underlying fundamentals.
Cautious Outlook as US PMI Awaits
Traders are awaiting US economic data that could shape expectations for Federal Reserve policy, with the ISM Services Purchasing Managers’ Index and JOLTS job openings in focus later in the day. Stronger-than-expected results could bolster the US Dollar, potentially weighing on AUD’s bullish momentum.
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